Supreme Court Snubs Citizens Whose Social Security Will Be Confiscated If They Refuse Government Health Care

Some of the U.S. Supreme Court’s most significant decisions are those declining to hear a case. Two weeks ago, the Court made such a momentous non-ruling in refusing to hear a lawsuit, Hall v. Sebelius, challenging government policies that deny otherwise eligible retirees their Social Security benefits if they choose not to enroll in Medicare. (I previously wrote about the case, and Cato filed a brief supporting the retirees’ petition for Supreme Court review.)

Despite having paid thousands of dollars each in Social Security and Medicare taxes during their working lives—for which they never sought reimbursement—the five plaintiffs were told by officials at the Social Security Administration and Department of Health and Human Services that they had to forfeit all of their Social Security benefits if they wished to withdraw from (or not enroll in) Medicare. This determination resulted from internal policies that were put in place during the Clinton administration and strengthened by the Bush administration. The plaintiffs sought a judicial ruling that would prohibit SSA and HHS from enforcing these policies, which they believed conflicted with the Social Security and Medicare statutes. A sharply divided U.S Court of Appeals for the D.C. Circuit eventually upheld them. By its decision not to hear the case, the Supreme Court let that controversial ruling stand.

At this point, one might ask why someone would want to give up Medicare. The answer is that some people would prefer to keep their existing (private) health insurance, but that for various regulatory and economic reasons insurance companies are wary of insuring people already covered by Medicare. Talk about the prototypical case of government programs crowding out the private sector!

In any event, the troubling reality of the Supreme Court’s non-ruling is twofold: First, the government now has full authority to force citizens to participate in a financially troubled program (Medicare) that was originally intended to be—and operated for almost three decades as—a wholly voluntary program. If they refuse, SSA and HHS can deny them their Social Security benefits. If they seek to withdraw from Medicare, SSA and HHS can not only deny them future benefits, but force them to repay all benefits received from both programs. Second, the Supreme Court’s unwillingness to address the issue raised here allows federal agencies to bypass Congress with impunity when drafting and implementing their own rules.

The plaintiffs’ lawyer, Kent Masterson Brown, had this to say in a press release following the Supreme Court’s order:

Not only have the Courts allowed these agencies to grant themselves permission to seize a retiree’s Social Security benefits should they opt out of Medicare, but they have allowed those agencies to turn voluntary programs into compulsory ones, giving Seniors no choice whatsoever but to accept the ever more limited health care offered by Medicare. The plaintiffs cannot pay for their own health care—and save the Government and taxpayers money—without forfeiting all of their Social Security benefits. There is nothing in the Social Security statutes that says a retired individual who chooses not to apply for Medicare coverage will be stripped of his or her Social Security benefits.

Martha de Forest, executive director of a group that supported the lawsuit, the Fund for Personal Liberty, also had a response:

Why would the government tie two programs together when they have different payment mechanisms and different start dates? It is about control, nothing more. That is why the government forces retirees to participate in Medicare as a condition of receiving Social Security Retirement benefits.

At base, it’s axiomatic that administrative agencies have no powers not granted to them by Congress and that regulations must be anchored in their operative statute. The rules challenged here failed this standard. Combined with the fiscal irresponsibility of forcing citizens to accept costly benefits during hard economic times, the SSA and HHS rules are an arbitrary power grab. Agency overreach imperils the separation of powers and therefore liberty.

Now that the Supreme Court has failed to counter this unauthorized expansion of federal power, it’s time for Congress to do so by legislation—as Quin Hillyer suggests in his commentary on the case. Richard Epstein has further thoughts on how Hall v. Sebelius illustrates the untrammeled growth of the administrative state.